If you’re poor, you’re paying more than your fair share of taxes

The Institute on Taxation and Economic Policy (ITEP) just released its latest state-by-state analysis of tax code fairness. The upshot? It’s virtually guaranteed that the less money your family earns, the greater the share of your income you’ll pay in state and local taxes.

According to ITEP, “almost every state tax system takes a greater share of income from low- and middle-income families.”[i] This is especially true for a state like Texas – while they’re known for being low-tax states, they put a significant tax burden on their low- and middle-income families. The ITEP Tax Inequality Index ranks Texas as having the third most unfair state and local tax system in the country, with the poorest 20 percent of Texans paying a 5x larger share of their income than the top 1 percent.[ii]

North Carolina has the 31st most unfair state and local tax system in the U.S, well behind Texas and Kansas, but ahead of states like Virginia and South Carolina.[iii]

ITEP notes North Carolina’s more progressive tax features, like the targeted child tax credit and the grocery exclusion for our state sales tax. However, they also flag the regressive aspects of North Carolina’s tax code:

Personal income tax uses a flat rate

Comparatively high state and local sales tax rates

Local sales tax bases include groceries

Fails to provide refundable Earned Income Tax Credit (EITC) since credit was eliminated in 2013